The companies last week agreed to work together to standardize a new technology from Motorola called "1Xtreme," a wireless transmission method capable of handling voice and high-speed Internet access for future wireless networks. The technology thwarts efforts by rival Qualcomm to promote its High Date Rate, or HDR, technology as a wireless voice and Internet delivery means.
Motorola and Nokia presented their plans for 1Xtreme to the Third Generation Partnership Project, a standards body, this week.
News of yet another standard is significant. The wireless world is already divided in many respects, with most European and Asian countries unified around a common technology standard called "GSM," while the United States largely has implemented a technology standard from Qualcomm called "CDMA."
Further segmentation of the wireless networking market will only make it more complicated for network operators to install wireless technology, as there will be competing standards to consider. That could result in higher costs for consumer cell phone users, because a variety of technologies complicates the ability of a network operator to deliver the service a subscriber has signed up for.
It also pits three Wall Street high-fliers against each other. Motorola, Nokia and Qualcomm all have ridden a wave of expectations for the wireless phone market, expected to boom over the next few years. Qualcomm was one of the best performing stocks of 1999.
"There's no way around multiple standards today," said Craig Ellingsworth, a senior wireless industry analyst at The Yankee Group. "We can't get people around the world to agree on one thing."
Wrangling over technology "standards" is nothing new. Standards are an important part of the technology because, in the abstract, they provide a means for different systems and software to communicate with each other, even if they are made by different companies. The recent tug-of-war between Microsoft and America Online on Internet messaging--in which the two firms fought over support for standards--is evidence of this.
Both Motorola's and Qualcomm's technologies are so-called third-generation, or "3G," wireless technology. 1Xtreme will compete directly with Qualcomm's HDR technology, which was unveiled last year. The difference between the two is that Qualcomm's technology separates Internet traffic to a different channel. Proponents say it gives that traffic a distinct path, while critics believe it adds a separate network that is unnecessary.
Battles between Motorola and Qualcomm are ongoing. The companies this week said they have settled a bitter patent dispute over wireless technologies.
Wireless carriers expect to widely launch mobile Internet services over phones, and higher-speed connections are a prerequisite to offering much more than the simple text messages and content--such as stock quotes and sports scores--that current systems allow. Both technologies, from Qualcomm and the Motorola-Nokia combination, aspire to solve the capacity problem.
Qualcomm's CDMA systems can deliver data at a slow 14.4 kbps (kilobits per second), hardly conducive to advanced Internet applications.
But most CDMA-based wireless service providers are expected to begin upgrading their digital networks next year to 3G systems capable of delivering data at 144 kbps. Those systems also are expected to double carriers' voice capacity.
However, although both Qualcomm's HDR and Motorola's 1Xtreme technically are 3G systems, they represent the next evolution beyond early 3G networks. Both technologies offer much higher data rates than the earliest 3G systems, giving wireless carriers the ability to deliver more and better Internet applications.
Qualcomm's HDR, which is backed by Lucent Technologies, promises speeds of 2.4 mbps (megabits per second) by splitting voice and data on two separate channels on the network. Qualcomm expects to offer some microchip samples later this year with commercial shipments in 2001.
Although the technology is being developed rapidly, many analysts question whether HDR is the best solution for wireless carrier networks after current CDMA upgrades.
"I really question whether (HDR is) going to pan out at all," said Weston Henderek, a wireless industry analyst at Giga Information Group. "These carriers are spending billions of dollars to build out their networks, and they're going to do it all over again in a couple years. What is the incremental benefit in spending more on HDR? To me it has all the makings of a niche high-speed product."
Others wonder whether Qualcomm's separate Internet network approach is best.
"From the carriers' perspective, if you can put one technology in rather than two, it's less expensive," said Jon Dorfman, a wireless industry analyst at the Strategis Group.
At the same time, analysts believe Motorola and Nokia may be rushing to develop their technology, which is slated for commercial service in 2002.
"I think this technology holds a lot of promise. I just think they're being a little unrealistic with their time frame," Ellingsworth said. "It took (the latest version of CDMA) about three years to get through the standards bodies."
Qualcomm representatives echoed similar sentiments, touting their technology as one that will be ready for market long before most other third-generation wireless technologies.
"We see (1Xtreme) as a press release and a presentation right now," said Qualcomm spokeswoman Christine Trimble. "HDR already has been demonstrated and tested. It's commercially viable. Theirs remains to be seen."
Moe Grzelakowski, senior vice president and general manager for network solutions at Motorola, said CDMA needs to be enhanced no matter what, given the expected growth of wireless Net access. "The question becomes, 'Do you also do HDR?'" she said.
Motorola estimates that CDMA technologies, though rapidly growing, will represent just 15 percent of the global wireless market, with technologies such as GSM leading the way.
Regardless of which technology earns the most support from carriers as they upgrade their networks over the next few years, analysts say Qualcomm will be a significant beneficiary. The company's strategy of licensing its CDMA technology has paid dividends, making Qualcomm a hot stock last year.
"(Qualcomm is) still going to get the royalties," Henderek said. "They're playing both sides of the fence."
Analysts said Qualcomm would prefer to own the underlying technology, as well as produce the chips that power handsets and base station equipment. But the company stands to gain even if the competing 1Xtreme, which is based on Qualcomm CDMA patents, proves successful.
"Qualcomm doesn't lose," Dorfman said. "They could win and they could win bigger."